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The bank customers share of profit made on loans by the bank is called the "Interest". It is the money the bank pays the customer for having their money deposited with the bank. As you know, the bank earns an interest income from loan customers for the money they lend them, and since this money they lend is taken from the deposits placed by customers, banks share the profit by paying an interest to the customer who has placed the deposit with them.
What else can I help you with?
What is a banks responsibility to depositors?
1) protection of money. 2) invest money to productive use. 3) meet depositors need.
How bank act as a mediator for borrowers and depositors?
The banks mediate between those who want to deposit surplus money and those who want money. To the depositors banks give them interest and from the borrowers they charge a higher interest rate. The difference between what they charge from borrowers and what they offer to the depositors is the main source of their income.
Why were banks one of the first institutions to the feel the effects of the stock market crash?
Frightened depositors feared for their money and tried to withdraw it from their banks.
The money a bank pays depositors for the right to use their money is called?
Interest.
What is a run on the bank?
It can happen that the depositors lose confidence in a banks ability to look after their money. if this happens in a big way most of the depositors demand the money they have in their accounts. this is known as a run on the bank. No bank can withstan a run on it without outside assistance.
What is a banks responsibility to depositors?
1) protection of money. 2) invest money to productive use. 3) meet depositors need.
How bank act as a mediator for borrowers and depositors?
The banks mediate between those who want to deposit surplus money and those who want money. To the depositors banks give them interest and from the borrowers they charge a higher interest rate. The difference between what they charge from borrowers and what they offer to the depositors is the main source of their income.
How does the federal reserve make sure that banks are protecting depositors money?
In an efforts to protect depositors money the Federal Reserve requires that banks follow many rules in their day to day business. They require the banks keeps a certain amount of cash on hand at all times and guarantee depositors accounts up to two hundred thousand dollars per account.
Did US depositors lose money in the bank failures during the great depression?
YES. Banks were using depositors' money to invest in the stock market. When the market crashed everything vanished.
Why were banks one of the first institutions to the feel the effects of the stock market crash?
Frightened depositors feared for their money and tried to withdraw it from their banks.
The money a bank pays depositors for the right to use their money is called?
Interest.
How does bank earn profit?
The way banks earn money is basically a two-step process. First, banks borrow money from other banks as well as from their depositors. The banks then loan that money out to businesses and people, and charge them a higher rate of interest than they are paying on the money. Banks also earn money by charging fees for services they offer.
What is a run on the bank?
It can happen that the depositors lose confidence in a banks ability to look after their money. if this happens in a big way most of the depositors demand the money they have in their accounts. this is known as a run on the bank. No bank can withstan a run on it without outside assistance.
What insured banks during the great depression?
There was no insurance. That's why their depositors lost all their money. This was the motivation for the establishment of the FDIC.
How do the commercial banks makes money?
By lending money and charging interest.A bit more:Banks also make money by investing the money of their depositors at a higher paying intesest rate than what they pay their depositors. For example, if they pay me 1% interest on the money I have in their bank, they then invest that money for more than the 1% they pay me.
What do the bank do with the money deposited?
Banks generally give out loans to people and companies from the money deposited. They save some percentage of total money to pay depositors that may come to withdraw their money. The rest is given out as loan. This creates a cash balance. The bank charges some interest on the loans it gives which is larger than what it gives as an interest to its depositors. This difference is the main source of income for banks.
After the stock market crash what happened to America banking sector?
It collapsed as frightened depositors raced to withdraw their money.
